WASHINGTON–The House Financial Services Committee is escalating its investigation into allegations of title insurers' use of illegal rebates and referral fees.

In a letter sent May 24, it requested documents and records from a Virginia title insurance company relating to a Colorado Insurance Department investigation of alleged illegal kickback schemes.

The information was requested from LandAmerica Financial Group, one of the largest title insurance underwriters. It is based in Richmond, Va.

The House panel's request stems from settlement talks between Colorado Deputy Insurance Commissioner Erin Toll and LandAmerica, which are aimed at reaching an agreement relating to her department's probe of LandAmerica, a department spokesman said Friday.

State official Geoffrey Heir said LandAmerica tried to have Ms. Toll removed from the settlement activity, alleging in a letter to Colorado Insurance Commissioner David Rivera earlier this month that Ms. Toll has a conflict of interest and the probe is based on a false premise.

The letter asked that Ms. Toll not participate in the talks, Mr. Heir said.

Mr. Rivera, however, said he found no basis for such claims and declined to remove Ms. Toll from the case, Mr. Heir said.

The House Financial Services Committee said in its letter to LandAmerica that it has received additional evidence corroborating testimony regarding the alleged illegal activity.

Peter Habenicht, vice president, corporate communications for LandAmerica, said in a statement late Thursday, “We respectfully disagree with the characterization and substance of the assertions made recently by Ms. Toll.

“LandAmerica has been and is committed to cooperating with all state regulators, and we are working to achieve a resolution with the Colorado Department of Insurance and will willingly cooperate with the House Financial Services Committee.”

The letter followed by one day an agreement between New York Attorney General Eliot Spitzer and two title insurers–Fidelity National Title Group Inc. and First American Title Insurance Company–in which the companies agreed to seek title insurance rate reductions of 15 percent for all properties up to $1 million in New York.

The New York probe revealed evidence of an illegal scheme by which real estate developers would receive free or discounted title insurance in other states in exchange for giving their New York business to the settling insurance companies.

Ms. Toll testified before the panel in April as a representative of the state and the National Association of Insurance Commissioners. Ms. Toll presented evidence of illegal kickbacks in violation of the Real Estate Settlement Procedures Act.

She was one of a number of witnesses including consumer representatives and insurer representatives. Industry officials defended industry practices.

The committee's letter to LandAmerica was signed by Reps. Mike G. Oxley, R-Ohio, chairman of the panel, and Barney Frank, D-Mass., ranking minority member.

The letter sought the information “in response to testimony and evidence…that raised questions of indirect threats to limit Commissioner Toll's testimony and her involvement in a proposed state title insurance settlement,” the letter said.

Ms. Toll, who heads the NAIC Task Force on Title Insurance, in February 2005 began investigating nine Colorado title insurers for alleged kickback schemes that resulted in overcharges to consumers for title insurance services.

According to Ms. Toll the insurers paid various firms for little-needed reinsurance with policy payments to captive reinsurers that served as a method of covering what were in effect kickbacks

Her probe prompted a number of states to launch similar probes, including New York, Florida, Washington, Hawaii, California, Oklahoma and Minnesota.

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Congress Probe of Title Insurers Heats Up

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